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London housing projects decline dramatically as recovery stalls

New residential construction in London is expected to fall sharply over the next two years, according to findings of a report into the capital’s housing market.

The Drivers Jonas/Deloitte London Residential Crane Survey 2010 warns the full force of the downturn will be felt in 2011/12 with a diminishing development pipeline.

Only 7,000 completions for residential units are scheduled for 2011 and only 5,500 units for 2012.

The report will raise further concerns within the housing sector, with housebuilders already facing huge pressures after the Government pulled Kickstart funds and told councils to scrap regional housing targets.

Mortgage lending in the UK has also been lower than expected in the first four months of the year, threatening the recovery in the housing market, according to the Council of Mortgage Lenders.

Recent estimates for the first four months of 2010 put gross lending at just over £40 billion, which is tracking below the CML’s forecasts of £150bn for the whole of 2010.

CML director general Michael Coogan said: “Now that we have seen data for the first four months, it is becoming clearer that the risks associated with our lending forecast for 2010 are on the downside.”

Data from the Bank of England shows mortgage lending at a higher rate than the nadir of the market seen in 2008, but still significantly lower than the peak of the market in 2006 and 2007.

Mortgage approvals peaked at 130,000 in November 2006 and dropped to just 27,000 in November 2008. There were 50,000 approvals in April.

The Drivers Jonas/Deloitte survey shows that London development activity over the next few years will hit historic lows.

Anthony Duggan, director and head of research at Drivers Jonas Deloitte, said: “The delivery of housing units is scheduled to fall dramatically over the next few years.”